Many Environmentalists Have Advocated a Substantial Increase in the Gasoline

question 39

Multiple Choice

Many environmentalists have advocated a substantial increase in the gasoline tax to cut down the federal deficit and to reduce pollution due to auto emissions.Such a tax increase would be devastating to people who commute significant distances to work.In fact, it would provide an incentive to relocate closer to work or change jobs.Economists refer to such effects of taxes as the

• A)burden of a tax.
• B)regressive incidence of a tax.
• C)incidence of a tax.
• D)excess burden of a tax.

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Definitions:

Equivalent Annual Annuity

The Equivalent Annual Annuity is a financial concept used to evaluate the annual return on an investment that has a different payment schedule, by converting it into an annuity with the same total present value.

Mutually Exclusive Projects

Investment projects where the acceptance of one project prevents the acceptance of another.

Capital Budgeting

The process by which investors or management assess potential large expenditures or investments to determine their profitability.

Internal Rate of Return (IRR)

The discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.